KUALA LUMPUR (June 16): IJM Corp Bhd’s 60%-owned subsidiary Kuantan Port Consortium Sdn Bhd (KPC) has been granted an extension on its concession to operate Kuantan Port, together with the development and operation of a new deep water terminal (NDWT) adjacent to it.

In a filing with Bursa Malaysia today, IJM Corp said KPC has today executed a new privatisation agreement with the Malaysian government and Kuantan Port Authority for the concession, which will commence from June 1.

It said a further 30-year extension will be granted upon the fulfilment of the Phase 2 development of the NDWT by Dec 31, 2039.

This new concession replaces a previous agreement dated Nov 22, 1997, which would have expired on Dec 31, 2027 — which both parties executed a termination agreement to end.  

Meanwhile, the NWDT will be developed by KPC in two phases, with a total investment of about RM3 billion. The development will be funded through borrowings and internally generated funds.

The project will involve the dredging of harbour basin and navigational channel, reclamation works, construction of new berths and cargo storage yards, and provision of infrastructure facilities and utilities associated with port operations.

IJM said the port concession and the development of the NDWT will not have any significant effect on the earnings and net assets per share of the company for the financial year ending March 31, 2016 (FY16) but is expected to contribute positively to the future earnings of the group.

In a separate press release, IJM said the NDWT, which is able to cater to bulk carriers and container vessels up to 150,000 DWT, is expected to commence operation in 2017.

It said Kuantan Port, currently operating at near full capacity with 23 million freight weight tonnes (fwt) achieved in FY2016, will see its volume doubling to 52 million fwt per year once the NDWT is fully completed.

It added that the government is investing approximately RM1 billion to build a new 4.63km breakwater at the port, which is under construction, and to upgrade external infrastructure to support the port’s expansion.

“The expansion of Kuantan Port is expected to spur the transformation of the East Coast Economic Region (ECER) and position Kuantan as one of the main investment gateways to ASEAN and Asia Pacific,” said IJM chief executive officer and managing director Datuk Soam Heng Choon.

Kuantan Port has been identified as a hub port for the ECER, and the expansion of the port is expected to be a catalyst for the realisation of the Malaysia-China Kuantan Industrial Park (MCKIP) in Gebeng.

IJM Land Bhd currently owns a stake in MCKIP and MCKIP II, which comprises 880ha of industrial and commercial land in vicinity of Kuantan Port.

IJM closed unchanged today at RM7, bringing its market capitalisation to RM12.50 billion.

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